As I am not looking to give out equity, I am trying to work out a way to take on private loans from these individuals in order to finance the next home, a BRRRR.I have a home identified, this would be a long distance BRRRR, my property management company would head up the rehab project using their certified and tested contractors, and I have a great relationship with my lender for when the project is done.I am new to taking on private loans in this regard, especially when it comes to setting terms and interest rates.This would be the first BRRRR project that I attempt, and the home we are looking at would be an almost "BRRRR light" as most of the work is cosmetic.How do I structure a deal for these private loans? 

Whatever the difference is, work out a payment plan, which might incorporate the deposit with tenants permission.

We have made it work out in our favor; however, the first year we were not cashflowing from the property.

And if you do put someone on your 'team' then do you trade them or dump them when they do not work out? 

Your best bet is to simply accept that you're not going to get the security deposit or to work out a written arrangement with her and give her forceful reminders when the payments are due (not forceful in a physical or harmful way, but in an implied threat way to let her know that you're serious).

Or, in these cases regarding security deposits, is it always better to contract the work out?

I would like to work out a feasible plan for moving forward so that when the travel restrictions loosen and the market softens I am ready and able to move.Now is a great time to take stock of options and formulate plans.I’m just not sure on the best way to go.

I was able to talk to my PM today and work out a deal for them to manage the rehab!

I'd say these are not good tenants and you would rather have tenants that pay on time and take care of the property, probably the best solution is to work out an agreement that they agree to leave or wait for the moratorium to be lifted and persue eviction for non payment.

If for whatever reason Section 8 doesn't work out, am I obligated to return the deposit?